Manage Client’s Account: Weights and Target Weights

What are Weights?

A weight is the percentage of the overall Folio value that each security in a Folio accounts for and may vary based on the market value of the security. However, the total of all weights in a Folio must always add up to 100%. An example of a Folio, with the weights of each security, is provided below.

Folio A Securities

Current Value

Target Weight

Current Weight

Difference

IBM

$250

25%

25%

0%

Microsoft

$250

25%

25%

0%

Apple

$250

25%

25%

0%

Amazon

$250

25%

25%

0%

Total

$1,000

100%*

100%*

0%

Select Weights?

Equal Weights

If you select this option, we will divide 100% by the number of securities in the Folio. The resulting percentage will be each security’s weight.

For example, if you have four securities, each security will receive a weight of 25%. If you then select a dollar amount of $2,000, we will buy $500 of each security.

If you have 20 securities, each security will receive a weight of 5%. If you invest $2,000, we will buy $100 of each security.

This is the best option to choose if you want equal exposure to each security you selected.

Market Cap Weights

A company’s market capitalization is calculated by multiplying its stock price by the number of shares outstanding. For example, if a company has 10 million shares outstanding and it is currently trading at $20, its market capitalization is $200 million.

Here are the dollar amounts that usually make a company either large cap, mid cap, or small cap:

If you select this option, we will add the market capitalizations of each security in the Folio. Then, we will divide each individual security’s market capitalization by the total Folio’s market capitalization. The result will be that security’s weight.

Example

You are buying three securities:

Security 1 has a market capitalization of $2 billion.

Security 2 and 3 both have market capitalizations of $1 billion.

The Folio’s totals market capitalization is $4 billion:

$2 billion + $1 billion + $1 billion = $4 billion.

Since $2 billion is one-half of the Folio’s total market capitalization, the weight of security 1 will be 50%.

Since $1 billion is one-quarter of the Folio’s total market capitalization, the weight of securities 2 and 3 will be 25% each.

If you invest $2,000, you would by $1,000 of security 1 and $500 of securities 2 and 3.

This is the best option to choose if you want more money invested in larger securities than in smaller securities.

Enter Your Own Weights

If you choose to enter your own weights, keep in mind that they must add to 100%.

What are Target Weights and how are they determined?

Target Weights are weights you set for each security in a Folio. When you rebalance a client’s Folio or add money to it, we will place the trade based on the Folio’s set Target Weights. You can change the Target Weights at any time.

Target Weights are set by you when you first create a Folio; each security’s percentage of the whole Folio is saved as the Target Weight.

You can take the following actions to alter a security’s Target Weight:

Modify a Folio or a trade

Buy more or Sell some of an existing security

Add a new or remove an existing security

Update a Folio’s Target Weights from the Weights page.

Note: When you Modify a Folio, the new Target Weights will be based on the market values of the securities at the time the order is placed, not when it is executed. The new Target Weights will be saved even if you cancel the order after placing it.

How can I modify a client’s Target Weights?

To modify a client’s Target Weights:

Go to the client’s accounts page

In the Actions menu located next to a Folio, Select View Weights

Select your client’s new Target Weights for each security

Then select Save to save the new Target Weights

How do I trade at Market Weights?

Trade at Market Weights if you want to:

Add more money to all the securities in this Folio,

Remove money from all the securities in this Folio, or

Sell all of this Folio.

When you Trade at Market Weights, we will automatically spread the amount of your order among all the securities in this Folio.

How does it work? Let’s say you want to add $100 to a client’s Folio. We’ll spread the $100 among the securities according to how much of each security is in this Folio when you place your order.

Example

Suppose this Folio has two securities. The securities changed in value since you bought them. You want to buy $100 more of the Folio today. This diagram shows you how we would spread $100 across this Folio.